Wednesday, October 1, 2014

Developer UIP sues residents of apartments at 13th and Monroe to double their rent

This is something I haven't heard of before. Last night a resident of 3501 13th Street NW sent me a copy of a lawsuit by developer UIP to effectively double the rents of all tenants in the building to pay for capital improvements in the building.

The rents are going up $991.51 for all 42 apartments, which are rent controlled and currently priced from $900 to $1400.

UIP purchased the building for $6 million in May and according to the text of the lawsuit, it's intended to be a temporary increase to make capital improvements.

The resident who emailed me says he believes it's meant to clear the building of all tenants so UIP can build condos.
In what would appear to be an attempt to make an end run around various DC laws regarding tenants rights, UIP justifies this "temporary" rent increase in the name of making improvements to the property. Clearly, this doubling of the rents of most tenants would be a defacto eviction for most of the tenants of this section 8 housing.
The lawsuit says that under a 1985 rental law, a real estate firm may petition DC Government's Office of Administrative Hearings for a temporary rent increase to make improvements. The improvements are replacing all windows and kitchen and bathroom appliances, installing a new elevator, security cameras and emergency generator and improvements to the lobby, hallways, water system and other repairs. The lawsuit states that the court should find that those improvements are good for the tenants.

They all seem like a good thing, except that this would effectively double rent for most people in the building. The resident who emailed me says is a Section 8, rent controlled building. I can't imagine anyone in any kind of housing who could afford an almost $1000 increase of rent, however temporarily. I also can't imagine this is what the law was intended to do. Unfortunately I can't find the 1985 law online, and the DC Code website doesn't seem to include that (unless I missed it.)

The tenants were notified on Sept. 15th to appear in court Oct. 24. The reader notes this means that many of the working tenants will have to take off work to fight the suit. He said there is a tenant association but he's not sure about legal representation.

I've contacted UIP asking for comment but have not yet received any.

Below is his email and after that the lawsuit and the document about the rent increases.
I thought that this info would be of interest to you and your readers. UIP property mgt Inc. the new owner of 3501 13th St NW, which bought the building in June for $6 million, promptly filed civil suit in July to increase the rents of every tenant in the building for $991.55 (I have attached PDFs of some of the court docs).

In what would appear to be an attempt to make an end run around various DC laws regarding tenants rights, UIP justifies this "temporary" rent increase in the name of making improvements to the property. Clearly, this doubling of the rents of most tenants would be a defacto eviction for most of the tenants of this section 8 housing.

Not withstanding the constraints of laws on the books designed to protect tenants from this sort of economic eviction, a quick look at UIP's costs associated with the building belies their need (if their justifications were to be believed) to make the tenants pay for the cost of capital improvements to their new investment.

Back of the napkin:
Cost of building: $6000000
30yr note @ 4%: ~$26,000/mo
Current gross rents: $44,791.

The tenants (of which I am one) were notified on the 15th of September by the DC Office of Administrative Hearings that they were required to appear in court on Oct 24 at the Office of Administrative Hearings or risk losing the case.

Now, UIP may not succeed in this opening gambit in it's attempt to force the people who live at 3501 13th from their homes. However, the crass disrespect of UIP towards the people who live at 3501 13th is demonstrated by the fact that they filed a suit that will require working people to take a day off and go to court to head off a cynical ploy by their landlord to evict them by other means.
UPDATE: Here's the city website on on capital improvements.

UPDATE 2: This is technically a "capital improvement plan petition," or something like that, not a lawsuit.

19 comments:

Anonymous said...

Let UIP know how you feel about this.

info@uipllc.com

Anonymous said...

Thanks letting people know about this, it's absolutely infuriating. Beyond letters/phone calls to Councilman Graham, does anyone have any ideas as to what people in the neighborhood can do to support these tenants and hold UIP accountable?

Anonymous said...

It's not a lawsuit but rather a petition for a capital improvement surcharge. Sadly, it is allowed by DC's "rent control" laws, which are filled with loop holes of this sort. However, DC law does limit the increase to 20% per unit. It will be adjudicated and that will take some time but the law is on the side of UIP . .

Anonymous said...

I'm sympathetic with the tenants, but if UIP is following the law, what's there to hold accountable? I assume that a judge is going to rule on whether this is legal and valid. Obviously, Jim Graham doesn't control the courts. The tenants ought to start a legal defense fund, but that's the only option here. Phoning Jim Graham and writing UIP angry letters trying to convince them that they shouldn't make a boatload of money isn't going to be effective.

Anonymous said...

Get your facts straight -
This is not a Civil law suit, this is a Capital Improvement Petition (CIP) and it's a routine part of the rent control regulatory procees. It's been a part of DC tenant law for over 30 years.

If the tenants were served papers advising them of their rights, it's better than a landlord trying to make an end run around the process. The tenants just need to organize an association, like groups routinely do around town, hire one of the law firms that specialize in this work, and use the due process accorded to them under the law. They can fight this if they want. Tenants routinely win these fights if they can organize and stay united.

JS said...

UIP specializes in this sort of thing - they buy old buildings, fix them up, and slowly convert all of the units to market rate through tenant turnover. City Paper had an article about it a while back: http://www.washingtoncitypaper.com/blogs/housingcomplex/2012/04/18/uip-rising/.

Anonymous said...

Have the residents contacted DC's Office of the Tenant Advocate? They seem to have legal and other resources available. http://ota.dc.gov

Andrew W said...

The resident called it a lawsuit and the form the tenants are defending against UIP and it's proceeded over by a judge. That sounds like a lawsuit to me.

To me the big issue is that it's doubling, rather than some smaller increase. In the previous UIP article mentioned, they worked with the residents, but in this case, that is not the case (at least as far as I can tell.)

I agree that they have a legal right to fight it.

Andrew W said...

Most recent anon, I'm not sure, but I have forwarded that to him. Thanks.

Anonymous said...

Andrew -- It is NOT a lawsuit. It is a petition and the process is administrative but the pseudo judges wear black robes and treat the petition like a lawsuit. The administrative judge who has been assigned this case is not a landlord lackey but the law totally favors the landlord as long as it can prove the costs to be incurred. However, rent increases are limited to 20% even if the petition is proved so interesting that UIP has falsely represented the rent increases that are allowed by the capital improvement law.

The tenants should contact the Office of the Tenant Advocate but don't count on that office for help regardless of the title of the office -- it generally turns down tenant requests for help regardless of its statutory obligations.

Anonymous said...

With such beautiful pros, you'd think the writer could find a job and pull herself out of poverty.

Joshua Tauberer said...

Here are the links to the law:

http://dccode.org/simple/sections/42-3502.10.html

and the original Rental Housing Act of 1985 is on page 430 here:
https://s3.amazonaws.com/dc_stat/DCSTAT-1985-1.pdf
(but it has been amended since then)

Anonymous said...

I too live in the building and am one of the incorporators of the tenant association. Not many, but major parts of what has been stated in this article are incorrect. It is not a lawsuit. It is a petition. They're not replacing anything in the apartments themselves except windows and appliances/cabinets "as necessary". I will not disclose details, but we are planning to fight this and any subsequent petitions for rent increase. According to many sources that I know that have been through this same situation (it happens very frequently these days in DC), we'll likely settle something in mediation. And no, they can't legally get more than 20% increase unless we agree. Furthermore, disabled and elderly are exempt. DC is extremely pro-tenant and I have personally used the Office of the Tenant Advocate's assistance very successfully in the past.

Anonymous said...

I hope UIP gets their way. The residents of this building have been getting a free lunch for way too long and it's time for this gravy train to come to an end. Either pay market rate or move. DC laws are insanely pro-tenant, which creates a disincentive to be a landlord and thus contributes to the housing crisis. And no, I am not a landlord nor have I ever been one.

Lastly, wasn't this building bought at a bankruptcy auction? That would seem to suggest that the financials of this place aren't working out too well and that a rent increase is in order.

Anonymous said...

Others who have dealt with UIP in similar disputes were not successful in settling their cases through mediation.

SpartaTumbles said...

The 'back of the napkin' calculations don't add up.

I'd be amazed if these folks got a 4 percent 30 year mortgage.

Most large commercial loans are for 10 years (or less) at considerably higher rates. With tons of extras like points, very high closing costs, etc.

But assume that's actually true.

With just that 4 percent loan it's $28000 a month, not $24,000.

And the 1 percent real estate tax is going to add another $6000 a month or so.

And insurance on such a building must be enormous.

Likely another $4000 a month.

And of course there's a ton of other costs - trash collection, management fees.

And the 'napkin' calcuation apparently assumes they always have 100 percent occupancy and all of those tenants always pay rent.

That's not very likely.

Anonymous said...

Also, if tenants are Section 8/housing voucher, the city puts a limit on the allowable rent. That might have an impact?

mona said...

I don't think this is 100% legal. If you read more than the DC regs on it is says

"Increases to cover improvement costs in individual units can’t be more than 15 percent more than the original rent; and, to cover building-wide improvements, no more than 20 percent. The landlord can only make the increase after all improvements are done, and it can only be in effect long enough for the landlord to recover the costs of the improvements. DC regulations allow the landlord to spread the costs of building-wide improvements over 96 months and individual unit improvements over 64 months."

So no more than 20% increase and can't do it until after improvements are done. He has to fix first then increase rent.

Anonymous said...

UIP and Steve Swat are the scum of the earth. This is not the official DCHD form for capitol improvements increase....this is a hearing. THE SOB I see has taken a new turn in his dirty tactics. and the city council has allowed him and others like him to take away our affordable housing. Call or email ALL of the city council members and tell them they will be voted out. The tenants need to go to Office of Tenant Advocacy of all of them are in agreement ..other wise OTA won't help.
For talk with someone who's been there..feel free to email lamplightertruth@gmail.com. I hate scum.